An independent review of Sharia law will examine how it can cause "harm" in communities, the Home Secretary has said.
Theresa May said this will include assessing how much it is being "misused or exploited" to discriminate against women and others.
She added the inquiry will also assess how incompatible the application of Islamic law may be with the law in England and Wales.
Mrs May confirmed the inquiry is under way and is expected to be completed by next year.
Mona Siddiqui, a professor of Islamic studies at the University of Edinburgh, has been appointed chairwoman and will be joined by three panel members.
They will be advised by two religious and theological experts.
In a written statement to MPs, Mrs May said: "This review will be a full, independent review to explore whether, and to what extent, the application of Sharia law may be incompatible with the law in England and Wales, such as legislation around equality.
"The review will also examine the ways in which Sharia may be being misused, or exploited, in a way that may discriminate against certain groups, undermine shared values or cause social harms.
"It will not be a review of the totality of Sharia law, which is a source of guidance for many Muslims in the UK."
Mrs May told MPs the review will focus on several issues, including the treatment of women in divorce, domestic violence and custody cases.
In a statement outside the Commons, she said: "A number of women have reportedly been victims of what appear to be discriminatory decisions taken by Sharia councils and that is a significant concern.
"There is only one rule of law in our country, which provides rights and security for every citizen."
Mrs May added the review will also look for best practice in relation to governance, transparency and assuring compliance and compatibility with UK law.
The Home Office initially announced an independent investigation of Sharia councils as part of the Government's counter-extremism strategy last September.
The panel includes retired high court judge Sir Mark Hedley, barrister Sam Momtaz and specialist family lawyer Anne Marie Hutchinson.
Imam Sayed Ali Abbas Razawi and Imam Qari Asim, who is chief imam at the Makkah mosque in Leeds, will advise the panel on religious and theological issues relating to aspects of Sharia law and how it is applied.
In a statement, review chairwoman Professor Siddiqui said: "It's a privilege to be asked to chair such an important piece of work.
"At a time when there is so much focus on Muslims in the UK, this will be a wide ranging, timely and thorough review as to what actually happens in Sharia councils."